6 ms·

What? a) XBOX usage destroys Wii in usage, games purchased, and subscription fees all of which are better indicators of the platform' success than hardware uni

by aresant 16y ago

What? a) XBOX usage destroys Wii in usage, games purchased, and subscription fees all of which are better indicators of the platform' success than hardware units sold which are traditionally a loss leader. And oh yah, XBOX is wildy profitable. Meanwhile Wii sales are down 45% since last September! b) They are JUST launching their mobile platform which has gotten fair to begrundgingly good reviews and is opening in 30 markets supported by HTC, DELL, LG, AT&T, Verizon, etc. You can expect MSFT to be AT WORST the #3 player in an insanely huge and growing market. c) BING just signed an innovative deal with Facebook, Google's copying features from them, and they're gaining traction while Google has been stagnant and slightly down year to date. And that's ignoring that Windows 7 is on a tear, and a great product to boot. 2010 has been a huge year for MSFT, if they manage to keep executing at this level they are going to win a couple of these markets. Microsoft plays loooonnnnng ball and they've got tens of billions in the bank, I certainly wouldn't say they're in trouble. DATA: http://www.crunchgear.com/2010/10/15/uh-oh-september-wii-sales-down-45-from-last-year/ http://www.crunchgear.com/2010/10/15/uh-oh-september-wii-sal... http://www.gamespot.com/xbox360/action/halo3untitledodstgame/news.html?sid=6237794 http://www.gamespot.com/xbox360/action/halo3untitledodstgame... http://www.engadget.com/2010/10/11/microsoft-announces-ten-windows-phone-7-handsets-for-30-countrie/ http://www.engadget.com/2010/10/11/microsoft-announces-ten-w... http://www.businessinsider.com/chart-of-the-day-total-cash-and-st-investments-of-tech-companies-2010-2 http://www.businessinsider.com/chart-of-the-day-total-cash-a... http://siteanalytics.compete.com/bing.com/ http://siteanalytics.compete.com/bing.com/ http://www.comscore.com/Press_Events/Press_Releases/2010/10/comScore_Releases_September_2010_U.S._Search_Engine_Rankings http://www.comscore.com/Press_Events/Press_Releases/2010/10/... http://www.comscore.com/Press_Events/Press_Releases/2010/6/comScore_Releases_May_2010_U.S._Search_Engine_Rankings http://www.comscore.com/Press_Events/Press_Releases/2010/6/c...

latch 16y ago
What?! Xbox is wildly profitable? xbox (original + 360) has lost MS tens of billions of dollars in its history (not an exaggeration). The fact that its just now (the last 2 quarters, an no more) pulling in profits in the hundreds of millions means that they'll break even in 5-10 years. If you gave me $10, and I gave you back $0.50, would you consider it a "wildly profitable" venture for yourself?
- aresant 16y ago
  In fact if I was MSFT and you gave me $25.82 (current stock price) I'd give you back $0.64 a year and a share of my stock (current dividend price). And in fact, they've made that sale 8,650,000,000 times so far (current outstanding shares). http://www.dividend.com/dividend-stocks/technology/application-software/msft-microsoft/ http://www.dividend.com/dividend-stocks/technology/applicati... EDIT -> You're ignoring that the division DOUBLED profits over the last year, what if they maintain that growth rate? Or 1/4 of that growth rate? Either way YES, that's a solid return on investment.
  - latch 16y ago
    I honestly look quite fondly on trending, and yes, xbox is trending in the right direction. But I still think calling it "wildly profitable" is silly. Having conceded that its trending positively, in this specific business, you're only as good as your last console. Nintendo is probably the only company that can lean heavily on its brand to get it through a poor hardware iteration (its brand and its so-far good-as-gold portable product).
    - redrobot5050 16y ago
      Keep in mind Nintendo is the only gaming company that sells hardware that turns a profit (Sony and MS lose money on console sales, or at least did on launch) and is actively trying to grow the market (and depending on who you believe, doing an incredible job of it) The mere fact that both Sony and MS now sell hardware that imitates the Wii's functionality should tell you this isn't a poor hardware iteration.
      - rbanffy 16y ago
        I think Sony still sells the PS2 in several markets. That must offset some of the subsidies on the PS3
      - latch 16y ago
        I wasn't talking about the Wii.
latch 16y ago
Also, this is a must-read article about the financial and actual state of bing: http://www.businessinsider.com/microsoft-is-trashing-us-for-not-eating-enough-crow-about-bings-market-share-gains-so-well-eat-a-bit-more-crow-2010-7 http://www.businessinsider.com/microsoft-is-trashing-us-for-... Essentially, for every 1% non-reoccurring market share (worth $150 million), MS is spending $500 million.
- jasonlotito 16y ago
  The number is actually "For every $1 of new revenue it generates, it spends $1 in traffic acquisition costs." (FTA) The 150/500 number you have includes all internet businesses. The problem is here, where he compares $2 bill for internet business, and then talks about a 4% increase in search. "Over the past year, despite losing more than $2 billion in its Internet business, Microsoft has gained about 4 search share points." Their internet business is far more than Bing.
  - latch 16y ago
    Ah yes, I think you are right. Still a decent article, but certainly not nearly as damning as I first thought.
    - jasonlotito 16y ago
      Disclaimer: I'm a Mac user (iMac, iPad, iPhone 4, MBP, AppleTV... yeah... I know). Linux at work. I actually think MS is doing really well with it's online initiative. Windows Live software is actually really nice, their Windows Live website actually does a great job integrating a large number social networks. MS Office still sets the bar for office apps (and no, OOo still suffers from missing out on basic functionality). Visual Studio is light years ahead of the competition. Windows 7 is really, really slick. And Windows Phone 7 looks nice. It's not a clone, they seemed to actually push forward with their Metro interface style. On top of all of that, you have XBox. When you combine all these efforts together, it's very ambitious. Just think, though, for a second, what will happen if they get all these pieces working together. That being said, I'm hoping for something special the 20th from Apple. They have the hardware, now they just need to get the software right (MS has the software right, they just need the hardware to bring it all together). Apple has the mindshare, but MS has the numbers. Also, MS has put a lot of work into it's developer tools to make app development across all these platforms incredibly easy. Anyways, what matters to me is that whatever happens, I benefit. I want a strong MS only because it means Apple is forced to innovate and not just rest on it's laurels (which, to be frank, it feels like it's been doing for some time now). But yeah, it's getting really interesting out there. All sorts of fun. =)
brk 16y ago
It seems like anytime I see someone disputing Microsoft's declining relevance, they are always talking about some rainbow that is JUST around the corner. XBox has been a money pit, but WAIT, they are start to eek back some of the billions in losses. The Kin died on the vine, WinCE phones were blah, but WAIT, they have a new mobile strategy. Various search and online presence initiatives got their numbers only by being embedded as the default home page on millions of new PC's, but WAIT, Bing is taking off. Microsoft is a HUGE ship, and it's sinking slowly. It likely has decades left, but overall it's going down, not up.
mjfern 16y ago
To your points above: a) In Microsoft's 2010 fiscal year (which has ended), its Entertainment and Devices Division (which includes the Xbox 360) generated $8.5 billion in revenues and just $679 million in operating income. Considering Microsoft's consolidated operating income in 2010 was $24 billion, this $679 million only accounts for about 3% of Microsoft's profits. And in any event the Xbox 360, the PS3, and the Wii may be irrelevant given the emergence of connected televisions, thin devices, and cloud-based gaming. b) I am moderately pessimistic about Microsoft's prospects with its Windows Phone 7 OS. There are definitely some promising signs, such as WP7’s distinctive and innovative user interface and Microsoft’s extensive partnerships with smartphone OEMs, application developers, and carriers. But there are also some definite warning signs: WP7 isn’t market ready, and it’s already mid-October; Microsoft is making it difficult for developers to convert existing iOS and Android applications over to WP7; Microsoft’s brand is weak with consumers and the developer community, especially in the smartphone market; and WP7 comes with a price tag, while the competition is free, at least on a variable cost basis. There’s also the fundamental issue of competition, which includes several ambitious and innovative companies, especially Google and Apple, that have established platforms and abundant application markets. Here are some more thoughts on WP7: http://www.fernstrategy.com/2010/10/13/the-windows-phone-7-challenge/ http://www.fernstrategy.com/2010/10/13/the-windows-phone-7-c.... c) Bing has made some inroads in search, but laregely at the expense of Yahoo. For the year, I don't believe Bing has gained at all on Google. There are powerful network effects and learning curves in search, and tremendous scale economies. It will be very difficult for Bing to grow its share in search, much less overtake Google, unless Bing releases a game changing protectable innovation, or Google makes some kind of fatal mistake.
- aresant 16y ago
  Fair points, counters: a) "may be irrelevant given the emergence of connected televisions" - Don't dismiss the millions of gamers that will buy in next generation for MSFT exlusives like Halo which popped off $200m in sale in a day, bringing net total Halo copies to ~34m sold. b) I argued for #3 which I think is in the bank with RIMM falling all over themselves. And the competition definitely isn't free, not even Android - http://www.businessinsider.com/android-costs http://www.businessinsider.com/android-costs - I believe we'll see a trend towards Win7 adoption from companies that aren't going for vertical integration. c) I believe this is the point that holds the most water. But to continue my contrarian rant I'd say that I put some credit into the argument that MSFT is fighting this war explicitly to distract Google's attention from desktop / mobile / etc.
brown9-2 16y ago
They are JUST launching their mobile platform "Just launching"? It's the seventh iteration of the OS. It's in the name.
- aresant 16y ago
  Fair - I should have said just launchng their contemporary OS
- bryanlarsen 16y ago
  They started at 3, not 1. And giving how incompatible it is with WM6.5, I contend that it's fair to say they're launching a new platform. But it's far from their first try.
  - rbanffy 16y ago
    Not really. I have seen Windows CE version 2. I must assume they didn't start on 2. NT started on 3 because Windows 3 was the first version of Windows that was usable.
    - bryanlarsen 16y ago
      Windows CE is the base for Windows Mobile, but isn't Windows Mobile. CE version 2 didn't work on smartphones. But I'm definitely wrong. List of versions: * Pocket PC 2000 * Pocket PC 2002 (the first to work on a smartphone, based on CE3) * Windows Mobile 2003 * Windows Mobile 2003 SE * Windows Mobile 5 * Windows Mobile 6 * Windows Mobile 6.1 * Windows Mobile 6.5 source: http://en.wikipedia.org/wiki/Windows_Mobile http://en.wikipedia.org/wiki/Windows_Mobile
mattmaroon 16y ago
I do cringe every time I see someone talk about how the Wii is beating the Xbox. Console sales are only part of the battle, and not the big part. People buy a Wii, play Wii sports and maybe another couple games for a few weeks, and then it collects dust. Xbox owners subscribe to Xbox live and buy new games quite frequently.
- patd 16y ago
  http://en.wikipedia.org/wiki/List_of_best-selling_video_games http://en.wikipedia.org/wiki/List_of_best-selling_video_game... Total Wii games sold as of June 1, 2010: 573 million Total Xbox 360 games sold as of December 2009: 353.8 million Total PlayStation 3 games sold as of June 30, 2010: 315.3 million So yes, the Wii is beating the crap out of the Xbox. Americans don't realize that the Xbox only does well in the US. Europe and Asia are a tough market for Microsoft.
  - chaostheory 16y ago
    "Europe and Asia are a tough market for Microsoft" Asia is a tough market for Xbox. Europe is just fine.
    - patd 16y ago
      They're doing bad in Asia and doing OK in Europe. The competition with the PS3 is hard in Europe, that's why I said "tough". They are number 2 in some countries (like the UK), but overall they're number 3. PS3 in Europe as of August 17, 2010 : 16 million XBox 360 in EMEA (including UK) as of November 13, 2009 : 10 million Sources : http://www.computerandvideogames.com/article.php?id=260424 http://www.computerandvideogames.com/article.php?id=260424 http://en.wikipedia.org/wiki/Xbox_360#Sales http://en.wikipedia.org/wiki/Xbox_360#Sales
  - mattmaroon 16y ago
    This is counting games that come with the Wii. The Xbox does not come with one. Xbox users pay to subscribe to Xbox live. Microsoft makes money providing the same service that Sony and Nintendo give away for free, and more people use it.
patio11 16y ago
FYI, Nintendo does not typically sell hardware at a loss. While they don't get an automatic recurring component, just on the hardware, Wii margins approach Apple hardware margins.

by aresant 16y ago

latch 16y ago

What?! Xbox is wildly profitable? xbox (original + 360) has lost MS tens of billions of dollars in its history (not an exaggeration). The fact that its just now (the last 2 quarters, an no more) pulling in profits in the hundreds of millions means that they'll break even in 5-10 years. If you gave me $10, and I gave you back $0.50, would you consider it a "wildly profitable" venture for yourself?

aresant 16y ago
In fact if I was MSFT and you gave me $25.82 (current stock price) I'd give you back $0.64 a year and a share of my stock (current dividend price). And in fact, they've made that sale 8,650,000,000 times so far (current outstanding shares). http://www.dividend.com/dividend-stocks/technology/application-software/msft-microsoft/ http://www.dividend.com/dividend-stocks/technology/applicati... EDIT -> You're ignoring that the division DOUBLED profits over the last year, what if they maintain that growth rate? Or 1/4 of that growth rate? Either way YES, that's a solid return on investment.
- latch 16y ago
  I honestly look quite fondly on trending, and yes, xbox is trending in the right direction. But I still think calling it "wildly profitable" is silly. Having conceded that its trending positively, in this specific business, you're only as good as your last console. Nintendo is probably the only company that can lean heavily on its brand to get it through a poor hardware iteration (its brand and its so-far good-as-gold portable product).
  - redrobot5050 16y ago
    Keep in mind Nintendo is the only gaming company that sells hardware that turns a profit (Sony and MS lose money on console sales, or at least did on launch) and is actively trying to grow the market (and depending on who you believe, doing an incredible job of it) The mere fact that both Sony and MS now sell hardware that imitates the Wii's functionality should tell you this isn't a poor hardware iteration.
    - rbanffy 16y ago
      I think Sony still sells the PS2 in several markets. That must offset some of the subsidies on the PS3
    - latch 16y ago
      I wasn't talking about the Wii.

latch 16y ago

Also, this is a must-read article about the financial and actual state of bing: http://www.businessinsider.com/microsoft-is-trashing-us-for-not-eating-enough-crow-about-bings-market-share-gains-so-well-eat-a-bit-more-crow-2010-7 http://www.businessinsider.com/microsoft-is-trashing-us-for-... Essentially, for every 1% non-reoccurring market share (worth $150 million), MS is spending $500 million.

jasonlotito 16y ago
The number is actually "For every $1 of new revenue it generates, it spends $1 in traffic acquisition costs." (FTA) The 150/500 number you have includes all internet businesses. The problem is here, where he compares $2 bill for internet business, and then talks about a 4% increase in search. "Over the past year, despite losing more than $2 billion in its Internet business, Microsoft has gained about 4 search share points." Their internet business is far more than Bing.
- latch 16y ago
  Ah yes, I think you are right. Still a decent article, but certainly not nearly as damning as I first thought.
  - jasonlotito 16y ago
    Disclaimer: I'm a Mac user (iMac, iPad, iPhone 4, MBP, AppleTV... yeah... I know). Linux at work. I actually think MS is doing really well with it's online initiative. Windows Live software is actually really nice, their Windows Live website actually does a great job integrating a large number social networks. MS Office still sets the bar for office apps (and no, OOo still suffers from missing out on basic functionality). Visual Studio is light years ahead of the competition. Windows 7 is really, really slick. And Windows Phone 7 looks nice. It's not a clone, they seemed to actually push forward with their Metro interface style. On top of all of that, you have XBox. When you combine all these efforts together, it's very ambitious. Just think, though, for a second, what will happen if they get all these pieces working together. That being said, I'm hoping for something special the 20th from Apple. They have the hardware, now they just need to get the software right (MS has the software right, they just need the hardware to bring it all together). Apple has the mindshare, but MS has the numbers. Also, MS has put a lot of work into it's developer tools to make app development across all these platforms incredibly easy. Anyways, what matters to me is that whatever happens, I benefit. I want a strong MS only because it means Apple is forced to innovate and not just rest on it's laurels (which, to be frank, it feels like it's been doing for some time now). But yeah, it's getting really interesting out there. All sorts of fun. =)

brk 16y ago

It seems like anytime I see someone disputing Microsoft's declining relevance, they are always talking about some rainbow that is JUST around the corner. XBox has been a money pit, but WAIT, they are start to eek back some of the billions in losses. The Kin died on the vine, WinCE phones were blah, but WAIT, they have a new mobile strategy. Various search and online presence initiatives got their numbers only by being embedded as the default home page on millions of new PC's, but WAIT, Bing is taking off. Microsoft is a HUGE ship, and it's sinking slowly. It likely has decades left, but overall it's going down, not up.

mjfern 16y ago

To your points above: a) In Microsoft's 2010 fiscal year (which has ended), its Entertainment and Devices Division (which includes the Xbox 360) generated $8.5 billion in revenues and just $679 million in operating income. Considering Microsoft's consolidated operating income in 2010 was $24 billion, this $679 million only accounts for about 3% of Microsoft's profits. And in any event the Xbox 360, the PS3, and the Wii may be irrelevant given the emergence of connected televisions, thin devices, and cloud-based gaming. b) I am moderately pessimistic about Microsoft's prospects with its Windows Phone 7 OS. There are definitely some promising signs, such as WP7’s distinctive and innovative user interface and Microsoft’s extensive partnerships with smartphone OEMs, application developers, and carriers. But there are also some definite warning signs: WP7 isn’t market ready, and it’s already mid-October; Microsoft is making it difficult for developers to convert existing iOS and Android applications over to WP7; Microsoft’s brand is weak with consumers and the developer community, especially in the smartphone market; and WP7 comes with a price tag, while the competition is free, at least on a variable cost basis. There’s also the fundamental issue of competition, which includes several ambitious and innovative companies, especially Google and Apple, that have established platforms and abundant application markets. Here are some more thoughts on WP7: http://www.fernstrategy.com/2010/10/13/the-windows-phone-7-challenge/ http://www.fernstrategy.com/2010/10/13/the-windows-phone-7-c.... c) Bing has made some inroads in search, but laregely at the expense of Yahoo. For the year, I don't believe Bing has gained at all on Google. There are powerful network effects and learning curves in search, and tremendous scale economies. It will be very difficult for Bing to grow its share in search, much less overtake Google, unless Bing releases a game changing protectable innovation, or Google makes some kind of fatal mistake.

aresant 16y ago
Fair points, counters: a) "may be irrelevant given the emergence of connected televisions" - Don't dismiss the millions of gamers that will buy in next generation for MSFT exlusives like Halo which popped off $200m in sale in a day, bringing net total Halo copies to ~34m sold. b) I argued for #3 which I think is in the bank with RIMM falling all over themselves. And the competition definitely isn't free, not even Android - http://www.businessinsider.com/android-costs http://www.businessinsider.com/android-costs - I believe we'll see a trend towards Win7 adoption from companies that aren't going for vertical integration. c) I believe this is the point that holds the most water. But to continue my contrarian rant I'd say that I put some credit into the argument that MSFT is fighting this war explicitly to distract Google's attention from desktop / mobile / etc.

brown9-2 16y ago

They are JUST launching their mobile platform "Just launching"? It's the seventh iteration of the OS. It's in the name.

aresant 16y ago
Fair - I should have said just launchng their contemporary OS
bryanlarsen 16y ago
They started at 3, not 1. And giving how incompatible it is with WM6.5, I contend that it's fair to say they're launching a new platform. But it's far from their first try.
- rbanffy 16y ago
  Not really. I have seen Windows CE version 2. I must assume they didn't start on 2. NT started on 3 because Windows 3 was the first version of Windows that was usable.
  - bryanlarsen 16y ago
    Windows CE is the base for Windows Mobile, but isn't Windows Mobile. CE version 2 didn't work on smartphones. But I'm definitely wrong. List of versions: * Pocket PC 2000 * Pocket PC 2002 (the first to work on a smartphone, based on CE3) * Windows Mobile 2003 * Windows Mobile 2003 SE * Windows Mobile 5 * Windows Mobile 6 * Windows Mobile 6.1 * Windows Mobile 6.5 source: http://en.wikipedia.org/wiki/Windows_Mobile http://en.wikipedia.org/wiki/Windows_Mobile

mattmaroon 16y ago

I do cringe every time I see someone talk about how the Wii is beating the Xbox. Console sales are only part of the battle, and not the big part. People buy a Wii, play Wii sports and maybe another couple games for a few weeks, and then it collects dust. Xbox owners subscribe to Xbox live and buy new games quite frequently.

patd 16y ago
http://en.wikipedia.org/wiki/List_of_best-selling_video_games http://en.wikipedia.org/wiki/List_of_best-selling_video_game... Total Wii games sold as of June 1, 2010: 573 million Total Xbox 360 games sold as of December 2009: 353.8 million Total PlayStation 3 games sold as of June 30, 2010: 315.3 million So yes, the Wii is beating the crap out of the Xbox. Americans don't realize that the Xbox only does well in the US. Europe and Asia are a tough market for Microsoft.
- chaostheory 16y ago
  "Europe and Asia are a tough market for Microsoft" Asia is a tough market for Xbox. Europe is just fine.
  - patd 16y ago
    They're doing bad in Asia and doing OK in Europe. The competition with the PS3 is hard in Europe, that's why I said "tough". They are number 2 in some countries (like the UK), but overall they're number 3. PS3 in Europe as of August 17, 2010 : 16 million XBox 360 in EMEA (including UK) as of November 13, 2009 : 10 million Sources : http://www.computerandvideogames.com/article.php?id=260424 http://www.computerandvideogames.com/article.php?id=260424 http://en.wikipedia.org/wiki/Xbox_360#Sales http://en.wikipedia.org/wiki/Xbox_360#Sales
- mattmaroon 16y ago
  This is counting games that come with the Wii. The Xbox does not come with one. Xbox users pay to subscribe to Xbox live. Microsoft makes money providing the same service that Sony and Nintendo give away for free, and more people use it.

patio11 16y ago

FYI, Nintendo does not typically sell hardware at a loss. While they don't get an automatic recurring component, just on the hardware, Wii margins approach Apple hardware margins.